Citizen Reviews and Brand Gov

McDonald’s now serves espressos, lattes, smoothies, ice cream, and, yes, even salads. On Monday, November 18, François Hollande made history when his approval rating dipped to 20 percent, the lowest of the 1958 Republic. Apple now sells several kinds of phones, tablets, computers, even plastic cases. Over the last two years Congress’s approval rating has been in the teens, dipping as low as 11%.

What do these facts have to do with one another and with the future of government?

It is conventional economic wisdom that McDonald’s success was built not on the quality of its burgers but rather on their consistency. No matter where you went you could rely on a mediocre hamburger fixed exactly the same way every time, down to the size of the mustard drop. You knew it would not be anything to write home about but you also knew it would never be horrible, and that it would not make you sick. The McDonald’s brand gave you that comfortable predictability when you traveled or when you simply did not feel adventurous. In short, it was your trusty old mutt.

But it wasn’t just McDonald’s. All brands were built on trust (and image), whether they were low or high brow, product or service. You bought a particular type of watch because you knew it served you well in the past. When a newer, fancier brand came out with added features at a lower price, you stuck with trusty Vanilla Watch, because you were unwilling to take the risk on the unknown, a watch that might not keep time. “Better is enemy of the good, as the French say,” you thought to yourself.

But no longer. Social Media has changed all this just in the last few years. You no longer need trusty McDonald’s when you’re on the road, or on vacation. You now use Yelp, or Facebook or UrbanSpoon, to quickly scan reviews and recommendations about local restaurants. It is not that you now take no risk when trying the unfamiliar, but social media credentials give you access to information, opinions, and actual customer critiques, stuff once impossible or too costly to obtain. Perhaps you still trust McDonald’s, but you trust your friends, and friends of friends, more.

With the undermining of the traditional trust brand, economic theory predicted two things would happen. Firstly, it predicted a revival, or at least survival, of local businesses. Secondly, it predicted that the traditional brand would adapt its methods. Both predictions are supported by recent trends. Local businesses have indeed made a comeback, although not a killing. But neither have the old brands died out.

The old have adapted to new conditions. McDonald’s at first experienced a decline in the mid-“oughts,” but recently surged back. It is doings so by changing its business model. It is no longer “mediocrity you can trust” but rather “everything you need in one.” McDonald’s now serves expresso, lattes, chai, tea, fresh baked goods, smoothies, real ice cream, several kinds of salads, several kinds of wraps, and more, depending on location. In Europe it serves beer, bread, and other local products.

Even seemingly invincible brands in complicated industries (where know-how is king) have had to adapt. Apple built its brand not on mere consistency but on quality and uniqueness; yet even it could no longer sit on its laurels. An upstart electronics company can build phones, use open source software, and sell on Amazon. The number of generic tablet computers out each quarter was more than could be tracked. Before social media, few would have risked buying a sophisticated electronics from an unknown player. Now anyone can read customer reviews on Amazon, Egghead or Ebay, and know a great deal about the quality and reliability of new gadgets from Brands Unknown.

Brand economics again predicted that Apple would either decline rapidly or rapidly change. Indeed change has happened. In the last couple of years, the pace of innovation has markedly climbed. Instead of one or two new products every calendar year, Apple now releases two or more each quarter. The pace of software upgrades has also accelerated. Once, its software remained unchanged for years; now overhauls and feature additions happen annually or more often. And Apple has even gotten into the economy device and case business.

What does it have to do with Hollande and Obama?

Taking government as brand for the moment we notice that information that was once high cost or filtered through gatekeepers, such as old media newspapers, is now available nearly to almost anyone. There are four such types of information accessible through the world wide web and social media: i) information on the internal workings of the brand, ii) info about the executives of the brand (read politicians), iii) info about other brands (read other countries) and its customers’ satisfaction, and iv) info about alternatives (read political design).

Economic theory predicts the increased availability and low cost of such information would set off a crisis in the old brands. Recent history in the West and the Mideast give good evidence of this. Firstly, trust in individual politicians is low, as can be seen by the large number of freshman congresspeople in the US and similar high parliamentary turnover elsewhere. In fact, about two in five lawmakers in the House have served for less than three years. It’s not because politicians are less honest than they used to be, its that voters do not need politicians for knowledge anymore, neither about the workings of government nor about ideas in the broader pubic sphere.

Secondly, trust in government itself is at an all-time low. Congress’s approval rating have never been so low for so long. It nearly hit single digits in the fall of 2011! The American President appears ignored by government and opposition alike, as we see in his recent timid response to the healthcare launch debacle. Likewise newly elected ruling parties in Europe and the Mideast are given little leeway, in terms of policy, by their opposition. And ruling parties are often granted little public courtesy by opponents.

Thirdly, citizens today are more often comparing themselves to those living in other countries. Migration remains extremely high despite poor economic outlooks. Up to date in 2013, there are 232 million migrants throughout the world, according to the UN. Inside the US, a place that used to think itself beyond comparison, more and more people are looking to other countries for solutions to problems or models of reform, for example, the health care system, the electoral system. One notices for example the new types of voting systems in place in certain localities in places as different as California, Minnesota, Maine, Vermont, Michigan and others. Such innovations favor changes not only within political parties themselves but to the way they can serve once elected.

Fourthly, and related to the previous, consumers of government (citizens) are beginning to consider, and experiment with, alternative to representative government. Australia and Canada have both used citizens’ assemblies (albeit unsuccessfully) to deliberate on and attempt to solve controversial issues that traditional political parties were impotent in settling. Both the Australian assembly on climate change in 2010 and the British Columbia assembly on electoral reform in 2004 failed to realize their ambitions. But they are evidence of the growing dissatisfaction with “politics as usual” and the willingness to try radical alternatives, such as letting a group of randomly selected citizens decide on the future of a country. This trend came to its high point to date last Winter in Iceland’s “crowd-sourced” Constitution, written by a group of 25 citizens chosen by lot, with public input through Facebook and Twitter. The Constitution was approved by a 67% super-majority of voters in October 2013. Although it has not yet been implemented due to deadlock between the ruling and opposition parties, it is an unprecedented political event in modern history. It also suggests the far-reaching ramifications of social media and equal access to information.

We should also remember the still fresh Tunisian, Libyan, Egyptian, and Syrian revolutions. It is not that social media allowed demonstrators to communicate with one another, as some in the West at first remarked, but it was new media that made both the level of government corruption and the extent of public dissatisfaction widely known, without filter, without censorship. The public in these Mideast countries saw “just how bad” government affairs were and that their compatriots were in solidarity. Furthermore, they knew that no matter what happened, events would now be publicized and transparent. They knew they had direct access to the world’s ears and hearts.

In summary, the crisis of “Brand Gov” is evident in growing restlessness, and distrust of the status quo, the whole world over. It is not about “the economy stupid” but about “economics stupid,” that is, basic economic theory about knowledge and information available to actors in any kind “market.” People can now shop, compare, read “citizen reviews,” and discuss with others the crucial issues regarding their own and other governments. Indeed, social media has changed the way McDonald’s does business, and it may soon change the ways representative governments conduct theirs.